Property Valuation
A Louisiana appraiser finds that a subject property has a garage while all comparable sales do not. To adjust for this difference, the appraiser should:
AAdd the garage's value to the subject's estimated value
BAdd the garage's value to the comparable's sale prices (upward adjustment) to equalize them with the subject✓ Correct
CIgnore the garage because it is a minor feature
DSubtract the garage value from the subject property
Explanation
When the subject has a feature the comparables lack, an upward adjustment is added to the comparables' sale prices. This equalizes the comparables with the subject — raising their prices to what they would have sold for if they had the same feature as the subject.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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